BNET Business Dictionary
Business Definition for: Default
- to fail to comply with the terms of a contract, especially to fail to pay back a debt
Wiktionary Definition for: Default
- To fail to meet an obligation.
- Ex: ''You were required to make a payment on the first of the month. You have defaulted.''
- To lose a competition by failing to compete.
- Ex: ''If you refuse to wear a proper uniform, you will not be allowed to compete and will default this match.''
- (''computing'') To assume a value when none was given.
- Ex: ''If you don't specify a number of items, it defaults to 1.''
- The condition of failing to meet an obligation.
- Ex: ''You may cure this default by paying the full amount within a week.''
- A loss incurred by failing to compete.
- Ex: ''The team's three losses include one default.''
- (''computing'') A value used when none has been given. Often used attributively, e.g., ''default value''.
- Ex: ''If you don't specify a number of items, the default is 1.''
Additional Resources
- SEC Opens Door to Centralized Credit-Default Swaps
- In an attempt to make what it sees as the shadowy dealings of the credit-default-swap market clearer to the outside world, the Securities and Exchange Commission today approved temporary exemptions that allow at least one firm, London-based LCH Clearnet Ltd., to operate as a central counterparty for the swaps. The...
- News items 2009-08-07
- Credit Default Swaps are the Real Stress in Bank Tests
- Stress tests to be revealed Thursday will likely show that while subprime, corporate and commercial real estate loans are doing their fair share of tearing apart bank balance sheets, the real gremlin in the banking engine is the credit default swap, or CDS. Credit default swaps are...
- Blog posts 2009-05-05
- Correlated Default Risk
- Under a comprehensive and unique data set of default probabilities, this article examines correlations between default risks for U.S. public non-financial firms. It documents the correlation structure both in the time series and in the cross section across these firms. It finds that default probabilities of issuers vary substantially over...
- White papers 2002-08-01
- Is Insurance Exchange a 'Trade Off' for AIG's Credit Default Problem
- Did we really need to pay those American International Group traders $165 million in bonuses to keep them around? The vast majority of Americans say "No." On the other hand, more Americans would know about a wife swap than a credit default swap. AIG Chief Executive Edward...
- Blog posts 2009-03-20
- Correlated Default Risk
- Using a comprehensive and unique data set of default probabilities from Moody's, the paper examine correlations between default risk for over 7,000 US public firms. This is the first paper to empirically document the correlation structure both in the time-series and in the cross-section across almost all US non-financial firms....
- White papers 2002-08-01
- Microsoft Internet Explorer 8 Is Updated with New Default Options
- Microsoft is offering users the up-front option of making Internet Explorer 8 their default browser, or else staying with a rival browser, as part of a Patch Tuesday update. The new version of IE 8 comes as Microsoft finds itself losing browser market-share to Firefox and other rivals, and negotiating...
- News items 2009-08-11
- Simulating Correlated Default Processes Using Copulas : A Criterion-Based Approach
- Modeling correlated default risk is a new phenomenon currently sweeping through the credit markets. This paper develops a methodology to assess alternative specifications of the joint distribution of default risk. Specifications are based on three criteria: level, asymmetry, and tail-dependence in the joint default distribution. The study is based on...
- White papers 2003-01-01
- Default Risk And Diversification: Theory And Empirical Implications
- Recent advances in the theory of credit risk allow the use of standard term structure machinery for default risk modeling and estimation. The empirical literature in this area often interprets the drift adjustments of the default intensity's diffusion state variables as the only default risk premium. It shows that this...
- White papers 2003-11-27
- Correlated Default With Incomplete Information
- The recent accounting scandals at Enron, WorldCom, and Tyco were related to the misrepresentation of liabilities. This paper provide a structural model of correlated multi-firm default, in which public bond investors are uncertain about the liability-dependent barrier at which individual firms default. In lack of complete information, investors form prior...
- White papers 2002-12-20
- Corporate Yield Spreads: Default Risk or Liquidity? - New Evidence From the Credit-Default Swap Market
- This paper uses the information in credit-default swaps to obtain direct measures of the size of the default and non-default components in corporate spreads. It finds that the majority of the corporate spread is due to default risk. This result holds for all rating categories and is robust to the...
- White papers 2004-02-01
- Measuring Default Risk Premia From Default Swap Rates and EDFs
- This paper estimates default risk premia for U.S. corporate debt, based on a close relationship between default probabilities, as estimated by Moody's KMV EDFs, and default swap CDS market rates. The default-swap data, obtained through CIBC from 22 banks and specialty dealers, allow us to establish a strong link between...
- White papers 2005-03-01
- Default Risk, Shareholder Advantage, and Stock Returns
- This paper, one analyzes the relationship between default probability and stock returns. Using the market-based measure of Expected Default Frequency EDF constructed by Moody's KMV, one first demonstrates that higher default probabilities are not necessarily associated with higher expected stock returns. One then show the puzzling and complex relationship between...
- White papers 2005-09-01
- CANADA: CANADIAN DEFAULT RATE UNCHANGED IN 2004.
- The default rate for speculative-grade rated Canadian issuers ended 2004 at 1.8%, unchanged from 2003, Moody's Investors Service reported today in its third annual Canadian default study. The default rate for all rated Canadian issuers (including The default rate for speculative-grade rated...
- Research articles 2005-05-03
- Fitch Ratings Launches Nth-to-Default Model
- NEW YORK -- Nth-to-Default trades are synthetic transactions where a credit event is triggered upon the first, second, third, or Nth reference entity to default in a portfolio. Fitch Ratings has launched its Nth-to-Default Model to evaluate the risks in these transactions. The Nth-to-Default Model is based off of...
- Research articles 2004-10-18
- Fitch Seeks Market Commentary on New Proposed Issuer Default Rating & Recovery Scale
- NEW YORK & LONDON -- Today, Fitch Ratings announced a new proposal designed to provide greater transparency into the interplay between default risk and loss given default than heretofore has been available to the market: -- New ratings scale designed to add greater transparency by combining probability of default...
- Research articles 2005-02-15
- What Did the Credit Market Expect of Argentina Default? Evidence from Default Swap Data
- This article explores the expectations of the credit market by developing a parsimonious default swap model, which is versatile enough to disentangle default probability from the expected recovery rate, accommodate counter party default risk, and allow flexible correlation between state variables. It also shows that major rating agencies had assigned...
- White papers 2003-01-06
- Simulating Correlated Default Processes Using Copulas: A Criterion-Based Approach
- Modeling correlated default risk is a new phenomenon currently sweeping through the credit markets. Little is known about the drivers of default risk at the portfolio level. This paper develops a methodology to assess alternative specifications of the joint distribution of default risk. Specifications are based on three criteria: level,...
- White papers 2003-01-01
- Default And Information
- In traditional models, it is implicitly assumed that the information used to calibrate and run the model is publicly available. In reality, model inputs and parameters are uncertain. The authors develop a class of structural default models in which investors are uncertain about the assets or the liability-dependent default barrier....
- White papers 2003-08-20
- Default Correlation in Reduced-Form Models
- Reduced-form models have proven to be a useful tool for analyzing the dynamics of credit spreads. However, some have recently questioned their ability to match the level of empirical default correlation. The key concern appears to be the assumption that defaults are independent conditional on the state variables driving the...
- White papers 2003-09-06
- Analyzing and Explaining Default Recovery Rates
- This comprehensive report analyzes the impact of various assumptions about the association between aggregate default probabilities and the loss given default on bank loans and corporate bonds, and seeks to empirically explain this critical relationship. The analysis has important implications for the results of various value -at-risk credit risk models...
- White papers 2001-12-01
